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LoopUp Group's price target whacked up to 600p from 475p by house broker

Management targets at least 20% organic revenue growth in 2020,and EPS accretion in 2019, and our new estimates suggest those hurdles are achieved, said Numis, which is LoopUp's co-broker, alongside Panmure Gordon

Remote meeting
The directors believe that the enlarged group would be well-positioned to migrate the MeetingZone’s audio conferencing business to the LoopUp product platform

The acquisition of MeetingZone (MZ) by LoopUp Group PLC (LON:LOOP) has prompted house broker Numis Securities to raise its earnings forecasts.

Numis now expects the remote meetings technology group to make adjusted underlying earnings (Ebitda) in 2018 of £6.5mln on revenue of £34.4mln; previously, the broker had forecast adjusted Ebitda of £5.3mln on revenue of £21.9mln.

READ: LoopUp to accelerate growth through acquisition of the MeetingZone Group​

The forecasts for 2019 have been increased to adjusted Ebitda of £12.7mln (up from £8mln) on revenue of £51.3mln (up from £28.4mln).

The broker said the acquisition would not only enable LoopUp to scale-up quicker but would support accelerated investment in further organic growth.

LoopUp plans to accelerate sales and marketing expenditure following the deal.

The cross-selling opportunities would also “leverage the network effect that LoopUp already enjoys in selling to new customers”.

“We continue to believe that earnings-based metrics are sub-optimal at this stage in LoopUp’s development,” the broker said, as it reiterated its 'buy' recommendation.

Numis's preferred metric is to focus on enterprise value (EV) – market capitalisation adjusted for cash and debt – as a proportion of sales.

An enterprise value of seven times annual sales seems the minimum level for a large group of US software-as-a-service companies so on that basis Numis has increased its price target for LoopUp to 600p from 475p.

Shares in LoopUp currently trade at around 475p, down 2.5p on the day.

Quick facts: LoopUp Group PLC

Price: 60.5 GBX

AIM:LOOP
Market: AIM
Market Cap: £33.42 m
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